Originally published by AxiTrader
A stronger US dollar and falling metals and iron ore markets over the past 12-18 hours have knocked the Aussie back below 80 cents to 0.7983. That's down around 0.44% from 7 am yesterday morning and it's left the AUD/USD sitting pretty much right on the important 3-monthly uptrend support.
That makes the release of the August jobs report here in Australia at 11.30 am AEST today a critical input into whether the uptrend holds or the Aussie heads toward 0.7930, perhaps 0.7850.
To recap, the market is looking for an increase of 15,000 jobs in August to follow on from July's 27,900 increase in employment. The unemployment rate is expected to stay steady at 5.6%.
If the market is right then that would be viewed fairly benignly by traders and it will be the release of important Chinese data on retail sales, industrial production, and urban investment 30 minutes later that could get traders excited.
The latest Reuters poll says the market is forecasting a rise of 10.5% for retail sales, 6.6% for industrial production, and 8.2% for urban investment. And these data are doubly important for the Aussie because they may also impact moves on Shanghai and Dalian futures exchanges for metals and iron ore.
So it's potentially a big day for the Aussie.
I'll get to the technical outlook in a moment. But before I do I want to highlight some comments that RBA board member Ian Harper made in an interview with Bloomberg yesterday.
Harper said that despite the strength of the Australian economy it is “still operating below its potential” which has implications for monetary policy. “So long as that is the case, why would anyone be suggesting tightening monetary policy when the economy is operating below potential? I mean hello?” he said.
And he's worried about households.
Harper said “Consumption is two-thirds of gross domestic product,” Harper said. “If households as a group were suddenly to decide that we really can’t afford this now, we’re going to start to slow up consumption to keep ourselves on an even keel, then that will certainly pull GDP growth away from where we want it to be”.That sounds very much like a man who won't be voting for a rate rise anytime soon.
So, to the charts.
On the dailies the AUD/USD is just clinging to the 3-month uptrend and a break of last night’s low at 0.7970 could usher in a move toward 0.7850 with 0.7930 as support on the way down. resistance remains in the 0.8050/65 region.
The 4-hour charts confirm the importance of last night's low. 0.79679 is the 61.8% retracement of the last rally which took the AUD/USD to recent highs. A break of this level would suggest a run to at least the bottom of the channel at 0.7919. But more likely a full retracement of the rally which would target 0.7870.
Again 0.7930 looks like support on the way down.
Have a great day's trading.